The real estate market in the United States is predicted to increase by 4.1%, making it a lucrative investment opportunity, especially in Seattle. But you need to be careful when scouting for suitable ones. Certain investment red flags can severely affect the value of the property, leading to costly repairs and lower ROI.
In this article, we'll explore some key red flags investors should be aware of when considering property investments in Seattle.
Investment Red Flags
Here are a few real estate red flags you should be wary of when scouting for investment properties:
- Poor Location
The poor location of the property can significantly impact your investment. Such locations can lower property value and decrease rental income. Moreover, they can make finding and keeping residents much more challenging.
You should avoid areas with high crime rates, neglected infrastructure, or few public facilities. Instead, you should look for properties in thriving neighborhoods. It should have nearby and accessible public transportation, shopping centers, parks, etc.
- Mold in the Property
One of the key investment red flags is the physical condition of the property, like the presence of mold. Mold can cause various health issues, including allergic reactions, breathing problems, and skin irritation. Although mold is removable, the process can be costly.
So, when you're searching for an investment property, remember to check for molds. You’ll mostly find them in places where moisture builds up, like basements and attics.
- High Vacancy Rates
High vacancy rates in a property can indicate many underlying issues. As a rule of thumb, a 3% or lower vacancy rate is preferable. You’ll have to investigate the reasons behind these vacancies. They could be due to poor management, undesirable locations, or even property-related issues. Learning about these issues will help you make more informed decisions about your investments.
However, if you settle with a property with high vacancy rates, it would be smart to hire a property manager. They can help you market your property and attract potential residents.
- Flipped Properties
Another factor to consider when investing in a property is whether it’s recently been ‘flipped’ or purchased. A flipped property involves investors buying ones that need repairs, improving them, and selling them further for a profit.
While this may not be one of the glaring investment red flags, it's still something to consider. Some of these properties might be renovated hastily or poorly to cut corners. You’ll need to ask for relevant documentation to ensure less apparent infrastructures meet safety standards.
- Electrical & Plumbing Issues
Electrical system and plumbing-related issues are often easily noticeable warning signs. For example, many older properties have deteriorating wiring due to age and use. So, you don’t necessarily need a professional for the initial inspection. Simply check for flickering lights or leakages. You can also examine the outlets and fuse boxes.
These issues can be expensive to repair and pose many safety hazards. So, it's important to assess the electrical and plumbing systems thoroughly before investing.
Conclusion
When investing in a property in Seattle, you must be aware of potential investment red flags. Factors like high vacancy rates and environmental hazards like mold can impact the property's value and investment. You should also conduct thorough inspections of electrical issues and plumbing problems when buying properties. That way, you can make better decisions and avoid costly pitfalls in the Seattle real estate market.
